National manufacturing policy
Published on: Mar 3, 2016
Transcripts - National manufacturing policy
"There may be many road blocks on the way to make that (NMP)actually implementable but we are on that path and I think its a tributethat a policy has been established and the government intends to stand byit,“ -RatanTata
The Indian government approved a long-debatedmanufacturing policy on October 25, 2011 The intent of the policy is to boost the country’smanufacturing capabilityTo increase the share of manufacturing sector from thecurrent level of around 16% of GDP to 25% by 2022To create 100 million new jobs by 2022 in specialmanufacturing hubs.
Increase technological depth and value addition inIndias manufacturing to enable India to improve its tradebalance which has been deteriorating with increases inimports (including large volumes of manufacturedgoods) exceeding exports.The NMP would be a key enabler for setting ofNational Manufacturing and Investment Zones(NMIZs), including the ambitious Delhi-Mumbai IndustrialCorridor (DMIC). This could be critical for India as an expected 130million Indians will be joining the workforce, many ofwhom may not be qualified to participate in India’sgrowing software industry.
In India, manufacturing as a share of GDP is muchlower than in economies such as China, where it is morethan 40%.Low labour costs could shift some manufacturing toIndia, and with a growing domestic market, localmanufacturing could also have logistical benefits.Electronics are likely to account for a large share oftotal manufacturing, which means that India’s new policycould be very important for the global electronics supplychain.
There will also be incentives for electronics,semiconductor and LED industries, as well as improvedtaxation policies such as a new goods and services tax(a form of a value-added tax) system.The policy provides for compensation of 20 days forevery year of service against the norm of 15 days. Thecompensation mechanism can be either a job lossinsurance policy by companies or a common sinkingfund set up by all units which can be dipped into in casea particular unit shuts shop.The policy also allows small and medium enterprisesexemption from long-term capital gains if the saleproceeds of a residential property are reinvested in theequity of a new start-up company.
“It hopes to... give comfort to investors through a single-windowclearance mechanism,” -Anand Sharma, Commerce and Industry Minister
Good industrial policy is not about micro-managing industry, nor is itabout picking winners - particular firms and technologies to bet on - arisky approach that has worked sometimes in other countries but failedoften too.Sound industrial policy is the process of accelerating learning within acountrys industrial eco-system that enables enterprises within it toimprove their competitiveness faster than enterprises in other countries.
Source: •www.displaysearchblog.com•www.articles.economictimes.indiatimes.com •www.indianexpress.com Thank You
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